Lower rice output to push up prices

Production may fall 3-5 mt for the crop year ending June; uneven distribution of rain in the past 2 seasons hit sowing

Rice might become costlier by 10-15 per cent in the coming months, due to lower production in the previous two seasons.

Lower and uneven distribution of rain in the past two monsoon seasons hit paddy sowing. The Union agriculture ministry estimates output to decline by around two mt this time, to 103.61 mt. Trade sources believe the dip would be between three and five mt for the crop year ending this June.

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Staple food for the middle class in many states, it is unlikely, however, to see a sharp increase in price. Its stocks are abundant in government warehouses. And, Food Minister Ram Vilas Paswan has said several times that the government would not allow commodity prices to move up.

“India’s rice output is estimated to decline by around three mt in the current crop year, which poses a threat for price rise. However, there would not be a sharp increase, due to surplus monsoon rainfall forecast and abundance of stocks,” said T Ram, scientist at the Hyderabad-based Indian Institute of Rice Research (IIRR).

Driven by Asia, global output is estimated to decline by 0.7 per cent to 491.4 mt in 2015, as compared to 494.7 mt the previous year. Many exporting countries such as Egypt, Thailand and Vietnam have started quoting higher prices for the next shipment. While Egypt has increased its quote by 1.5 per cent, Thailand has revised its export quotation for its benchmark variety by four per cent more than in January (also on a stronger currency and expectations of new trade agreements. Prices have also increased in Pakistan, due to ongoing sales to Africa.

“A price spurt, however, would be capped due to huge availability of stocks with the government and households,” said V K Chaturvedi, managing director, Usher Agro, a producer listed on the stock exchanges.

Rice stocks with the government’s Food Corporation of India were 22.16 mt on April 1, compared with 19.42 mr the previous month and 12.69 mt on January 1. The stock was 17.09 mt on April 1, 2015.

Stcoks at home have also been augmented by less export demand. Shipments abroad were 5.72 mt between April ‘15 and February ’16, as compared to 7.62 mt in the same period last year.